PT Sumber Alfaria Trijaya Tbk (Alfamart), an Indonesia based convenience store chain operator, is planning to expand its footprint in the Philippines to about 160 stores by the end of this year. The move is expected to help strengthen the company’s presence in the south east Asian region and help boost income from exports.
As of August, the company has 60 Alfamart outlets in the Philippines.
According to Alfamart Philippines website the size of an average store ranges from 150 square meter to 300 square meter and requires an investment of around P30 million. With 60 stores already in place and a plan to add another 100 stores, Alfamart’s is likely to facilitate an investment of around P4.8 billion ( $102 million) in the country.
Hans Prawira, president director of Alfamart says, the company is targeting to operate over than 100 outlets in the Philippines, through its unit, Alfamart Retail Asia. “The project will be funded by loans from Philippine banks,” he added in an official statement.
Alfamart and Philippine-based SM Retail Supermarket, a subsidiary of SM Group has set a joint venture company (JVC) to operate the retail outlets. Alfamart holds a 35 per cent stake in the JV and SM Retail Supermarket holds 65 per cent.
Indonesia’s heavily regulated retail market – particularly relating to the aspects of franchising and foreign investment – may have driven Alfamart to look for growth overseas.
Indonesian franchise regulation requires 40 per cent of all stores to be company-owned and the remaining shares owned by franchisee holder, while 80 of product offerings have to be locally sourced for two years.
The smaller format of mini-marts will provide SM with the flexibility to foray into urban area. At the same time, it will be able to rely on Alfamart’s know-how and experience of operating the stores under comparable market conditions in Indonesia.
In Indonesia, the company plans to open 1,200 new outlets by the end of this year. “More than 50 per cent will be opened outside Java. We already have a distribution channel in Pontianak, Banjarmasin, Manado, and the latest one, in February, in Batam,” Hans said.
As of March 31, the company had 10,068 Alfamart outlets, of which 2,958 are managed under a franchise scheme, while the rest are owned by the company.
The company also operates 809 Alfamidi and 48 Lawson convenient stores with larger size than Alfamart.
With over 10,000 stores in the portfolio, Alfamart controls about 50 per cent of Indonesia’s convenience store market through multiple brands – Alfamart, Alfamidi, and Lawson.